Episode 27: Why You Need to Join a Real Estate Mastermind Group

David Phelps, D.D.S. owned and managed a private practice dental office for over 21 years.

While still in dental school, he began his investment in real estate by joint-venturing with his father on their first rental property in 1980. Three years later, they sold the property and David took his $25,000 capital gain share and leveraged it into thirty-one properties that produced $15,000 net cash flow within 15 years.

Multiple health crises suffered by his daughter, Jenna (leukemia, epilepsy and a liver transplant at age 12), caused David to leave the practice so that his time could be spent with his daughter. Unfortunately, a divorce and failed practice sale provided additional setbacks that he had to work through.

Today, David is a nationally recognized speaker on creating freedom, building real businesses and investing in real estate. He authors a monthly newsletter, “Path to Freedom” and hosts “The Dentist Freedom Blueprint” podcast. Freedom Founders Mastermind Community has grown to over fifty members, providing the pathway to freedom for many professional practice owners. He is also a huge advocate for joining a real estate mastermind group and explains why in our conversation.

“The greatest risk in life is doing nothing.” – David Phelps

What you’ll learn about in this episode:

David’s story

How David started his real estate mastermind group for medical professionals

Why work hard — save — and retire doesn’t work in today’s world

Leveraging other people’s time, experience, and access to deal flow

How to make up for lost time with real estate investing

The great interest rates available right now

Why owing money during inflationary times is actually good

How deals are brought to members in David’s mastermind groups

How much it costs to join the group

Why David created the group

How doctors should find private money

Why — no matter what your niche is — you need to join a mastermind group

Resources:

Transcript:

Mitch: This is Mitch. And welcome to the Real Estate Investor Summit Podcast. Yes, am here Mitch-be-the-bank-Stephen, the all-knowing-host, your greatest host and am here with a very special guest, you gonna find this guy very interesting, you gonna get you some, David Phelps today. So, David how are you doing?

David: Mitch, hey am doing great. So, glad to be with you, I find it always engage with you, anytime we could– so, I love it.

Mitch: I met David in a mastermind group, which actually changed my life. And I met a lot of fantastic people, he was one of them. There was a lot of smart people on that room, Mastermind Grand Consortium are typically not cheap but, if you are of the right mindset and you are ready to up your game way more than you pay, that’s the whole, point, right?

So, I got really interested in David’s story. So, I would let him tell you how he started but he is dentist and then so many around him wanted to know how he did what he did, he developed this into a very very different niche mastermind group of his own. So, am not gonna try and tell your story, David. They don’t need you to tell story, am kind of start from the beginning and how did you go from dentist to being a financially independent real estate investor.

David: Well, I actually started in real estate before I became a dentist. So, the story goes like this. I was in college, getting ready or getting to get close to in moving on to dental after college and you know, I didn’t have any extra money. I waited tables, to pay my tuition. But, I was always thinking ahead, like when I do have some money someday, when I actually am out on the floor, and practicing, how can I do [INAUDIBLE] with that money. Because, I knew in my heart, I had an entrepreneurial background always trying to figure out, how I make money, different different sort of everything I do. I felt, how I can make my money work for me instead of always working for my money. And so I read some books on stock market, because that’s everybody has been talking about, the stock market. So, that was one place where everybody put their money, people end up like that. And I got all of sample books on real estate, and so we don’t have the internet back then. So, books was really about it. And I came across the book, authored by, oh darn it, you know it slipped through my mind, but you know, how I turn a million million dollars–thousand dollars into million dollars in real estate, oh darn it, I can’t remember the– I’ll think of it. Anyway, that book really hit me, because I read about, taking an asset, I cancel that, a hard asset– a real estate, you know. In this case– houses and you and I both wanted houses, we should go and speak the same language. Taking houses and learning how to acquire them, to buy them, right. And then turn them into either cash or cash flow. And cash flow of course is a rental property, while I hold or as you do so well, Mitch, you buy and then you deal with finances. Either way, you create cash flow, by buying right and adding some value and then turn around. But, I thought about that and I thought, you know, “I’m gonna be in dental for 4 years, in Dallas, Texas why not talk to my dad and if he invite to be investor. I had no money. I had no credit. So, my dad is is not entrepreneurial, he is a hard worker but I convinced him to trust me to be the manager. So, he puts in the capital for down payment and he [INAUDIBLE] to acquire this house we bought together in Dallas, Texas. This is 1980, Mitch and am first year in dental floor so, am learning how to manage the property and tax, and help it fix it up, and fast forward, 4 years later when I graduate, we sold that property and we did 50-50, kind of regular type of joint venture today. Dad brought up the capital, I did the management and he got his money back, of course. And then, we split 50, which was about $2,000 dollars half came from profit. And I am thinking, Mitch. Am thinking, you know I worked nights on weekend, waiting tables, and I didn’t make any $25,000 in that period of time, like what I do on this one house, one house which I didn’t put in the wee hours in managing. And so, that was like put [INAUDIBLE]. So, I graduated dental floor, and went on in the private practice but I kept buying, I kept buying properties. And I bought a lot of it [INAUDIBLE] but really- [INAUDIBLE from 03:22 to03:25 were totally assumable loans, you can buy a subdue, and I used other private capital, because I couldn’t go to the bank, and I didn’t wanna go to the bank. I just– I have an overtime mass portfolio of property and we are paying down loans, building up that equity and life was really looking pretty good, and then my wife and I had our first child, like it was 1992. And at age 2 1/2, she was diagnosed with high risk leukemia, so bam. All of a sudden, you get your wife loan up, you think you got everything in control, you think everything is good, and then at top of this, you have [INAUDIBLE], you have no pull over. And that’s sort of thing turned upside down emotionally in my family. And you know, fast forward just let you know the Jenna. Jenna is my daughter, our daughter, she’s 24 now and she survived leukemia. She also survived a liver transplant, which is well. She was 12 years old when she had that liver transplant, Mitch, when I decided you know what, i’m not doing this for training time for dollars, being tied to a tight schedule 5 days a week, working working you know, 10-11 hours a day. Even though, I was making money, it wasn’t giving me freedom. And I decided right then and there, I need freedom in my life. I don’t need just to make more dollars and real estate has added up, I just never sat down and really look at what I was doing. But, now I had the reason why, my daughter. Am thinking and okay, “I’m really gonna be looking at this”. I decided right then and there which probably– she was recovering from transplant, she had surgery done, I am done. So, next step, I go [INAUDIBLE], I sell it. I sell it. I get out and now, am spending time with my daughter. She got better and I spend more time with her, and then I was like, “What am I gonna do now”? This was 12 years ago. So, what am I gonna do now? I mean, am still a relatively young guy. And I am loving my family and time off, but I feel like I have the need to earn income, right? I had friends of mine, I had colleagues in dentistry and medicine, who really don’t know much about what I did in real estate.

Mitch: They also do– that you just– was able to walk away, they got to be scratching their heads, and “How did you do that”?

David: Well, that was– they go and “Great, David. We understand why you did it, ‘cause your daughter. We probably get that, but financially how’s you pull that off. That means, aren’t you like suffering. Because, we couldn’t do that, but we’ll be worrying fortnight”. So that’s why I said, “Well, you know what, I start buying real estate when I was [INAUDIBLE] and I kept buying and kept buying, figuring this stuff out, little by little with people to help me and so, trial and error, and so basically, well they say, “Well, could you show us”? Well, a small group, Mitch. Am talking about you know a handful, “Okay, well. Let’s get together and we just invite Meredith and Dennis, or something, and I was like, “Here’s how I’d do that”. “Well, could you show us how you did it”. And I am thinking, “Well, yeah I can”. So, little by little I started having more doctors [INAUDIBLE from 05:33 to 05:36] and the whole thing kind of morphed into what our mastermind is today, Freedom Founders Mastermind, and it’s just a lot of fun, go ahead Mitch.

Mitch: You created the

you are in Dallas, and you only, if I understand you right, we were talking a little bit before the show here. You only take business professionals, medical professionals like surgeons, I don’t know–anesthesiologist, medically related professionals, right?

David: Yeah. Because we all speak that language. And we both know, Mitch. I mean real estate if done the right way, will work for anybody, obviously and what we did will work for anybody. But, if it is kind of infinity of a group, if all these highly educated hard working very clinically field surgeons, doctors, anesthetist, veterinarian, but they have all the same problem. They have high income but no net worth.

Mitch: They’re all also afraid in trading time for dollars, which is the problem. They’re making great money but they don’t– as soon as they stop chilling out, they’re not making money.

David: Exactly. And though, everyone thinks well, things will just take care of themselves or I have a financial adviser, my CPA or whoever, you know in the course, I don’t wanna beat up on [INAUDIBLE] because there is a purpose for them. But, where’s the only place they can help their client go forth and do that? If you wanna call that. Of course, on Wall Street. I mean, that’s the default mechanism, why they don’t do well they have them in real estate. Well, number one, they don’t understand real estate. Number two, they don’t make any money helping clients in real estate, if they didn’t understand, so there’s a whole missing link to the opportunities that you and I, and people that we are associated with in real estate know that there’s a whole of these people out there, people that I help and business owners, I mean, they need help.

And we are the connectors, if there is one thing I can give back to your listeners, it would be, take what you got which is your knowledge, am assuming am talking mostly to quick on the ground real estate investors, who are trained deal flow and make things happen where their market is. So, what you have is you have access market, you have knowledge. Most of it, we always need capital. So, you go get capital, and there’s [INAUDIBLE] that or you can get private capital. And I’ve always loved private capital, Mitch. Once you have the relationship, it gets easier. And the doctors don’t wanna get involved in house flipping or contractors, or deal with tenant. They like to lend money or buy performing notes, or [INAUDIBLE] based that people really provide turnkey. They don’t wanna get involved. And they’ll take a lower return on their money, because they are more after about the safety, or the return of their frequent investment, or more than they need to get, you know, high double digit return. I tell them, that is what where [INAUDIBLE] you will be active in which out there, on the street like we do, and we generate and negotiate and put the deals [INAUDIBLE] and you can get double digit returns but doctors where’s your time most valuable.

Mitch: Can I tell a story here? I have a lot of doctors that invest with me personally. And I’ve gotten really, you know, I’ve done really well learning how to raise private money. And of course, a lot of people that I talked to are professional, they make great money. And so, in my little routine where I show them what I do and show them how it works and how they are protected with the first lien on the profit and all that. I show them my profit margins, I show them exactly how much I am making, how I make my money and in figuring out that, you know, when people see that the business that I am in is very lucrative, that they’ll understand why they’re gonna get paid back and how they’ll gonna get paid back, and why they should never not get paid back, because they can see how much money am making.

But, the inevitably, they always say, “What am I just do that, and not loan you the money”. So, I always say, “Okay, doctor, you just take single off the wall there and throw it out in the trash can and repeat after it”. And I always, very bluntly and say, “No. No. No. I am just teasing”. And they’ll say, “You know, why don’t you just stay making that good money where you at, and let’s just put to work it on a reasonable interest rate for both of us, and you don’t worry about this stuff. You either get or you get. Get paid, but what we agreed on, with the use of your money, you know the interest rate, or whatever the deal is, or you get the house. And I know you don’t care as I do getting a house, but you should’ve go down to the local real estate meeting in the first Tuesday of the month here. And say, you want to be out in this deal, you should be out of it in a couple of days, you know.

So, let me ask you this, I heard you say, there’s a reason why work hard and save eventually retire, and it doesn’t work in today’s world. What is that about?

David: Mitch, that’s what I call the simulation theory of financial investing or private investing, that’s what Wall Street will tell you that, that’s what most financial advisers or money man will say, if you work hard, pay your overhead, your business, pay your taxes, pay your lifestyle, whatever that is, and then hopefully, you have a little bit left over, right? You got a little bit of leftover, in paying all that stuff and you a little bit every year and you handed it over to somebody that the brokers, or [INAUDIBLE] that is on Wall Street, stocks, bonds, annuities whatever and that’s call the [INAUDIBLE] and some of us are really really disciplined and they really script made, probably in 30 years, you know they probably will end up with [INAUDIBLE]

Mitch: I call it gambling. I call it gambling.

David: Yes, it is.

Mitch: Why you just don’t take it to Vegas, put it all on the [INAUDIBLE] and let’s get the answer right now, are you rich are you not? All you are doing is playing a horrible game. I think by now people really realized that, that game is rigged and we are not part of it the all-knowing inner circle, and we don’t have no way to win that game. And even so, what is the returns overall in the last 10 years. What is the most you can help to be up or down, if you just stay? What is it like, 2 % or 3%? I don’t remember.

David: It’s very and you are right, Mitch. I think most people do actually understand that they can’t outwit that game, here’s the problem. What is their other choice, and also, the people feel that they are just doing what everybody else is doing. So, you know, the doctor’s, am one of them, [INAUDIBLE] where there’s always from financial people there, right? Clinical, dental people. Financial people there. Then, again there’s down there, their retirement plans, all of this stuff. You know, and so the doctors think, “Well, I guess everybody else is doing it, that’s what I should”. The other choice, Mitch is like, they remains which money is in deeds that is less than 1% that doesn’t work either. So, that kind of stuck, that kind of suck, unless you get out private luck, and you mix it with people that really have a game plan and I think, that’s the key is the connection, connection with the right people that allow the hard working professionals to actually get their money in a place where it can grow, and not be a suspect to volatility or roller coaster ride we know Wall Street has always been and always will be.

Mitch: Yeah. So, you talked about to use every possible area of leverage. Talk to me– talk to us about that.

David: Yeah.

Mitch: What are the areas of leverage? Not just financial, there’s more areas of leverage.

David: So, yeah. So, leverage is usually product in terms of financial [INAUDIBLE] using leverage, we know, in real estate you know is the way to go wealthy but faster but you have to be careful with leverage [INAUDIBLE] ways it could take a downfall. So, that’s one form of leverage. But, the other forms of leverage, Mitch would be utilizing or leveraging other people’s time, experience and access to deal flow. And I think all 3 of those are important, because you said, too many people think well they watch active people can do in real estate to go well. Why don’t I just do what you just do? And you said it very well. Well, come on, let’s go do it, let’s go find deals, go negotiate the deals, go and manage the head of the contractors and go and find out just how easy it really is not. You can go back and well, that’s why we need to leverage other people. So, it is a people’s business. Real estate is a vehicle, it is a people’s business all the way and so the people that you know, and do joint ventures with and whatever forms that you wanna do, that’s the fast track. You know, you gotta build relationship, you gotta know who are you working with, get their track record, you got to make sure you work with people with integrity. Then, you cut the cards by using document that secures the deal, as you said, you always got security with real estate, don’t have that on Wall Street. So, worst case, you can always take a property if things didn’t worked out. Which, again you know, know good people who do the right thing. That would be very very rare occasion. I mean, much [INAUDIBLE] lawsuit on Wall Street, which happens–

Mitch: I get people get the white sheet on. If you ever get the house that need, here’s the white sheet, this is what you do. You know, you call your attorney, call this attorney, if I don’t know, I should walk up and hand you the deed, if I can’t pay you but, I don’t know maybe i’m dead or something. So, call this attorney, and he’ll get you the deed, and here’s the pool of local clubs in the area and when they meet me, just walk down there, you called it up over your head, and say, “This is how much I invested in this house. I want my money back right now. Who wants to give it to me”? You know, there should be a fist fight in the hall, and there should be some glove on the check or cash.

David: Exactly.

Mitch: And by the way, i’m gonna do a really big favor right now, David. It is how I turned $1,000 into a Million in Real Estate in my spare time by William Nickerson.

David: [LAUGHTER] Thank you. Thank you. William Nickerson, I guess I could have Googled it, too. But, thanks for helping me out. William Nickerson. That was a classic.

Mitch: Okay, ’cause I think the readers might wanna know that. I don’t wanna go too far into this. Without giving the link where people can learn more about your mastermind group. And remember this, is where professionals in the medical industry, the peripherals right there, but that’s what you specialized in. And that’s what the group is all about. It’s reinvestorsummit.com/freedom, all lower case, freedom, that’s reinvestorsummit.com/freedom and there’s where you will learn more about his Freedom Founder Mastermind Group in Dallas, Texas where they deal with professionals. Now, I have a whole lot of questions, am not yet done with you, Sir. You just hang on right there.

So, how– I mean, a lot of people probably come to this revelation later in life or later in their careers, so how can people in their 40’s or 50’s or even 60’s can they make up for their lost time?

David: Well, yeah. There’s no pitfall on their talents, I mean, am 60 years old and maybe I put 4 kids in college and grad school and really I’ve got really nothing in real tangible assets, maybe the house now, maybe even I had bad debt on it. So, you can make it up for the lost time, Mitch. It is about, getting in touch with the right people to buy, wholesale deals in the current market. So, there’s wholesale deals, price terms will get you that, and again, using financial leverage the right way. We have low interest right now. So, if you want to leverage in good turnkey cash flowing property now, there’s a window we have right now, probably it is the best time in my life time to do it. We’ve never seen a rate so low, and we like to do that by shortening the dollar. I seriously think we’ll gonna have some high inflation, I don’t see how we can staple it, and so if you’ve got fallen asset in real estate which will rise with inflation value and the cash flow then, you’ll gonna be index whatever happen where the country or send you over the next 5 or 10 years later.

Mitch: I wanna make this dynamic clear to the listeners. And I may gonna say it in a different way, if you don’t mind.

David: Absolutely.

Mitch: You know, when you owe money, that’s a great thing when inflation hits, because everything becomes more expensive, but your debt stays the same. And so, let’s say a dollar used to buy a little loaf of bread, now it cost $2 to buy a loaf of bread. But, you’re just still making payments on the dollar that you borrowed for the local bread. So, owing money during the inflationary times is good thing, right? Just like they said, during the inflationary times, everything will cost more and if you are buying and holding properties that’s great, because, they’ll be costing more and more and more, meaning you’ll be appreciating, if you are charging rents, then also the rents will be going up, keeping with the inflation, but that debt just stays fixed. That’s the wonderful thing about having debt in the middle of an inflationary times. Am I on the right page, with you?

David: Yeah, Mitch. I look at it this way, who’s the biggest debtor? Who’s the biggest borrower out there? I’ve say government, okay. So, I take it okay. Then, why wouldn’t I want to saddle up and also be a borrower or a debtor, because whatever works for that government will work for me as well. People that have been told all their lives to be pay all debt, you know, they’re getting rates over the pools right now. I am talking about the citizens, who are out of career, out of business, they [INAUDIBLE] and [INAUDIBLE] and the low interest for one, because, they can’t get a return on their money, right? And that’s wanna gamble on stock market. Most of them hoard back, because they are getting rates over the pools right now. Because they were told to do the [INAUDIBLE] thing. But, they can [INAUDIBLE] but you are a debtor, then you can require more assets because you can get most of the money of you put in, you can get 80% of loans on your finances. You can buy 5 properties versus 1. So, you acquiring more and you gonna ride that [INAUDIBLE] just realized what the government is doing and use that benefit ’cause they’re gonna make things work for them and the inflation is the only way out. The only way out, government like [INAUDIBLE], you might as well understand that, and gets hooked up any way, until inflation really get into the gear which in and [INAUDIBLE], Mitch. My guess is, in the next decade, if you wait, you’ll gonna be [INAUDIBLE] now is the time. Now is the time to get involved and understand how this dynamic works. You’ve got to, you gotta play the game. It is not– the rules are all rigged. Yes, including about [INAUDIBLE] the way things are set up today. There is no way around.

Mitch: Yeah. So, when you have a job, you have this linear growth and so, you know, it is a work based income, paying time for dollars, so how do you move from there to going like exponential growth investing in capital assets? How are you teaching these doctors, what are do you talk into these doctors about to get them to move from the linear base growth to more exponential growth.

David: Well, first thing I show them, Mitch is my progression in both tax and real estate. So, if I go back [INAUDIBLE] when I first led that first property with my dad, and I kept buying, now over the 27 years that I owned and practiced, and sold it 6 years ago, and [INAUDIBLE] they own real estate, my net worth and as well as my passive cash flow, now passive cash flow realized means I don’t have to work every day, great [INAUDIBLE] but the net–my net worth and positive cash flow was 4 times, my dental practice net worth and the income that I created, actively there, every day. So, right there, 4 times possible I did real estate. So, what I tell them Mitch, it depends upon on what a person brings to the table, where they are in their life and their career. Do they have the [INAUDIBLE] capital? If not being the [INAUDIBLE] very well. If they have money in tax or in tax valued insurance policy or they have dead equity in their house or their office building or if they have too much money in stock market, where they have the portable capital? If they could, you know, under their terms and it’s like converting it to real estate asset. Do they have money in self-directed IRA’s? [INAUDIBLE] they have to look into different pockets of money that they have, and start figuring out a blueprint, if they are close to me individually, have [INAUDIBLE] it’s different for everybody. Do they still have a lot of gas? Do they still have kids that go to school? Yeah. We’ll list all of these things together but again, you know, if someone really needs to make up for lost time, ‘because their plan didn’t went well, they weren’t disciplined or passionate or let’s say younger person, Mitch, just getting started in life, or maybe they’re in their 20’s or 30’s or 40’s and they still got some work years ahead of them, but they go, “Man, I want to fast track things”. I would say, “That using appropriate leverage means using other people’s money or the bank money in the right way, is the fast track”. And yes, we’ll learn how to do it the right way. That’s why i’m buying anything and [INAUDIBLE] fix rate, longer term, next [INAUDIBLE] available rate, a basic thing right that but the right asset. That’s gonna be a fast track and you only do that in real estate, because there’s no asset class and you know put a certain percentage of your own money and acquire the whole asset. Everything else you in investment like gold or silver or you invest in stock market, you got to put it all in. There’s no leverage in those [INAUDIBLE] and you always pay retail in those other asset class. In real estate, you have the opportunity to buy wholesale. In other words, you can buy instant equity through the price or terms in the market. And you know the right people in the right market.

Mitch: That’s like a [INAUDIBLE] for a lot of these professionals, because they are paying full price for the assets they are buying and then all of a sudden here’s the chance that you know, in their minds that they get lucky or if they worked hard enough on the side looking at some stuff, or they go to a group like yours, where you can probably, and in your investment, in your Freedom Founders Masterminds, you know people bring deals to those groups or all the doctors and professionals bringing stuff to the table to see if other people wanna partner, or how– what goes on inside that room?

David: Yeah. Good question. Well, because, I don’t want the doctors to go out and create deal flow in their own backyard. For 2 reasons. One Mitch, where they live may not be inappropriate for this. Let’s take California or Seattle. There’s a doctor at Seattle, that market has a cash flow for anything. They could do anything they want. Secondly, they don’t have a time where– and really know what a good deal is. So, you– through people that you and I know, Mitch, through other masterminds where there are all real estate people nationally, that there are great markets, great boots on the ground, I know who they are, and I know that they bring good deals. They will come and provide different types of deal flow. There’s no peachy, there’s no peachy because we all work in it. We take deals, we do due diligence, we do a session called, “Deal or No Deal” where we actually have members who participate as they start to do due diligence and how to break down deals, to see whether the deal is good or maybe not so good. So, a lot of education, but, Mitch, what I have to bring the deal flow, because no good, Mitch. They have a great conference or seminar or mastermind where you are receiving good information, but if people can’t go out and put it to use, then what good is it, right? So, I realized very early that I couldn’t be the one who will provide the deal flow, because, I can’t create that much. I don’t want to go out and create that much. And besides—

Mitch: See, I put you in the middle anyways. That puts you in the middle.

David: You put me in the middle, not a good place to be. But, I want diversity. I want my members to have a wide range of different asset classes also in different price point and different geographic areas. I show them how I invest. Like you, Mitch, years passed, I didn’t it all myself. When I was younger, I had more time and energy, I did all the stuff myself but today, no. I value my time. I would much later joint venture and [INAUDIBLE] participation, a slice of a deal with someone who is actually running our main deal. I really think it can slice of many deals that can try to take all– for the whole deal, because I can get so much further down the road,[INAUDIBLE] and I have more relationships, and I have more [INAUDIBLE], you really need the first slice over the whole deal. But, again the key is, doctors don’t have to manage things, it is done–

Mitch: They don’t have to manage anything. They are doctors. That’s what they wanted to be. That’s what they are. That’s what they are trying to do. Now, they figure out that they can’t do it forever. And that they have to sit down sometime and then the lightbulb goes off and hopefully they join your group, the Freedom Founders Mastermind, about how many members are in the group?

David: Just– we just have barely over 50. Like 52 in our group right now.

Mitch: So, there’s 52. How often do you all meet?

David: We meet quarterly. We meet quarterly in Dallas.

Mitch: Is it always in Dallas?

David: Yeah. Always in Dallas. I have an elite group that we do some outside smaller group national line and some agent– but the primary group, yes we meet in Dallas.

Mitch: Okay, and then, what do you– what does it cost to be part of this mastermind?

David: Well, it is an investment. They have to understand that, Mitch. Anything that cost for them to, you know, to turn on it, I don’t think that’s a good thing to do just yet. The investment is $25,000 per year.

Mitch: Okay. And you know, that’s about what the mastermind is, you and I were in, and it was so worth it. It’s the V part of it. As a matter of fact, my whole business changed after that year. And I, for the first time in my life, I bought just like a under a hundred houses except the difference was, I’ve done that before. I’ve done more than. But, the difference was, I didn’t see any of them. I didn’t see any of them and I didn’t see any of the buyer. I bought and sold just under a hundred houses in 2015. I didn’t see–maybe I saw 10 of them, because I was bored and I just wanted to drive around my guy.

David: [LAUGHTER]

Mitch: But, I don’t have to see any of them. And you know, the same thing in 2016, it is still a really hot real estate market. It is hard to find, it is harder to find good deals than normal, and it is still in cycles. It will come back down for sure, and I’ll be ready for it when it does. But, am still gonna buy about 77 houses this year, on my phase 4. I haven’t seen– people ask me like, “Where do you have houses”? I am not really sure. [LAUGHTER] But, I know the neighborhoods when I saw one they came across my board, it was embedded by my office. Probably, I have other houses there, you know in those neighborhoods. I know what the prices are in my town. I know what my culture is, I know what I can owner financed houses for. So, being part of a mastermind, you know I had the same instinct with [INAUDIBLE] that’s a lot of money. But, looking back at what I got out of it, and what it taught me, my being in a room of like-minded people, all looking after each other. All giving resources, all willing to pitched in and help the other guy make a decision, or raise the money or do whatever, it was a tremendous, tremendous experience in my life and the only thing that made it difficult was, there were so many good ideas, I couldn’t finish all. You know, it’s like, “Hold on, just– you know”. I got to implement like A & B right now and I’ll hit the C & D when I finish implementing A & B. And the only thing that I could say about it was sometimes, it was overwhelming just all the great stuff that I was learning. So, I could understand why haven’t all the same type of professionals in a room with someone like you and other people like you around them, helping them, coaching them through deals that they are not really cut out to decipher. You know, what I mean? It will be like you, going in and trying to be a surgeon, you are not even close to have an awareness of how to do it. They don’t have the wear with all, how to seize up an apartment complex or commercial building or develop a piece of land or anything. So, I think you have a great service. I think, that I would like to hear about how long the people are usually involved in this? How long have you been doing this in the first?

David: We’ve been a little over 4 years. And we have kind of unique process, Mitch. It’s called free for life. And how does it works is, everybody comes for free founders, we sit down with them and they had individually, a knocked out freedom blueprint and they can get to define what freedom– true freedom means to them. It doesn’t mean they have to quit working, but could they quit working? So, what is take debt there? What is investment they have to track each month with profit cash flow make that happen and so, we just receive this [INAUDIBLE] where we– what that info look like and we will head from there, here’s where you are today, here’s what– here’s your game plan. Now, you will evolve and change obviously, but you got to have at least a target. And we say, in 5 to 7 years, I would say at least 90% that we would let in our group, 5-7 years will go free for life, which means they could get to be part of our mastermind for life, with no additional investment. Now, we got right now 1, 2,3,4-5 members that are just under a year or two are right now, this year going free. And their timelines from everywhere from unknown when I could let go for 7 years, and then cut down to less than a year. Here’s the why, Mitch. Because, they have the confidence now, if they can take whatever their capital assets are, and the sale of their profit equity or whatever else they have, and they know now, they [INAUDIBLE] protectively, they can orchestrate their return on that capital because they are free. Because that point of time, where they just go to Wall Street, and I can’t let go of this practice, because I have no idea if my money’s gonna stay up or stay down. What other terms can be? So, I start hanging on, working until 70 or 75 years old. That’s a tragedy, is the inability for a hard working people orchestrate their finances. They’ve never been taught. They never understood how to deal with predictable cash flow, and that’s what real estate does, if you know how to do it the right way.

Mitch: Well it is a tremendous service to these professionals. What a tremendous service. I can’t say it enough, I think it is ingenious. I think it’s really smart of you to recognize this niche and this need. So, am gonna swing this back around to, I mean when you first started this group, were you thinking when you first started that this is where i’m gonna raise my private money from, these sources? Is that what you were thinking at first?

David: Well. No. Not. Not really, Mitch. ‘Cause I’ll be honest, you know I had enough private source capital, there was like 4 maybe 5 people over the years that I kept going back to, that one time that I the track record with. I really got all the capital that I really needed. You know, David Phelps doesn’t need a Donald Trump, okay? I don’t need that in my life. I love real estate. I love doing deals but if I like how much can I stack up, you know, there was a point where I enough is enough. That doesn’t mean I don’t do that role, no I do. But, am not crazy going to invest on that. I just broke a man’s rule. So, it is really the mastermind that was really my kind of next thing to do. My wife asked me, after I was at a [INAUDIBLE], “What are you gonna do”? And I didn’t really have a good answer. So, this Freedom Founders really just came together and grew organically. And I love it. And I like being around my colleagues. I love being able to help people, if I know real estate works so well. So, I noticed while I am still a doctor, too. I know a lot of people go out to weekend seminar somewhere and there’s tons of them today. Where they get stuck in this outfit, you know it’s not gonna work. And I wanna create a really a great tight knit group where things get done and there’s high integrity. And I told my that’s where we look foremost. You know, what’s the value. If ever we are losing any kind of value, any loss of integrity or deal flow or that kind of thing in our group, then that’s when we stop and we shut down or we get falter. And am not trying to grow something, Mitch. It is just a lot of fun. But, there’s a lot of doctors that are bringing them their capital, and getting it together, and they are learning how to do it the right way. And they get close to approve, whether doctors now ban with this going for 4 years or 5 years who they can ask about it, if this really works. Because, you could ask me, but am gonna tell them it works. You got to tell them that it works, Mitch. ‘Cause we’ve been there, but to talk to somebody else who just started a few years ago and am like, “How does it work for you”? I mean boy, it runs fair. I mean, you put [INAUDIBLE] but–

Mitch: Yeah. That’s great. So, you know what these doctors are looking for and how they think, how would you suggest, because private money is really a big deal. Am helping my students– in their efforts to find private money all the time, because that is the key to unlimited success, I mean you know, you can make a good living, I say this all the time. You can make a good living in the real estate business, but you become a multi multi multi millionaire when you master private money. Because you can buy any deal you want at a reasonable rate for both people, the lender and you– the borrower. And so, how would you suggest one go about approaching the professionals in their circle of influence and what are these doctors looking for? What do they wanna hear? What do you need to provide to?

David: Yeah. I tell you what, stories always work well. Instead of pitching $1,000 and say,”Hey, am a real estate guy or gal, and I do all these stuff and “Hey, doc, we would like to desperately–“. I mean, that’s the wrong approach. So, you use authority, whether you’re one on one, there’s an opportunity, and actually you can get clear for a visit. Sometimes, it is hard to that when you’re at a doctor’s appointment, right? But, even a short story, even something like this, Mitch. You can lead off– since the doctor comes in and you have your pleasantry,”Hey, this Mitch, you know, how’s life treating you. How things are going on”? And you can take some like,”Hey, doc, you know, it’s awesome. I [INAUDIBLE] you know, just closed on 2 houses this week and we’re putting new families on those houses, were financing their recent rent. Most likely free one that must get cash. You got to focus on one main thing to get really good at that. The processes, Mitch. You’ll [INAUDIBLE] lose it in place in the last couple of years that allows you to buy so many houses without being hardly seeing anyone of them. That’s because you [INAUDIBLE], you can’t do that if you are out, chasing [INAUDIBLE] they are here and there and everywhere. You need to focus on– you have done that extremely well. Now, I think that’s the key test for anybody.

Mitch: Well, that was part of the result of going to that mastermind that you and I were a group of, that we attended. Was that– I started noticing but, first of all I saw that it could be done. That you could actually buy houses and you keep on buying houses without seeing them. That was the first step. Someone else is doing it. My golly, if they can do it, I can do it. Then, it was just about focusing on how– what all the pieces, that needed to be in place to make that happen and how they’re checked and bounces so am not just gambling with these purchases. And so, I learned from some of the very best out there that were doing it. And if you think, that price that I paid for that mastermind, wasn’t worth it. In my mind, you are crazy. You know– I would have paid 4 times that much, because it made me more than, you know. Not only that, the phone numbers of the people that I can pick up and call now, because of that group. People that I trust, that I believed in, that they are great guys, like you. And I can’t it enough. To all the listeners out there, David Phelps is very admirable, and integrity based man. And I can see why he’s having success, because it shows you can always see it in a person. You can always see it when they don’t have. And David has it. I appreciate you so much for being on, you know. I didn’t wanna propose you on marriage or anything but—

Mitch and David: [LAUGHTER]

David: It’s always great time with you always, Mitch. I love what you do. I love the person that you are. We’ll come back around and I’ll scheduled a few one without [INAUDIBLE] I like Mitch laugh, so I might as well.

Mitch: And I appreciated. You have a great one. This is Mitch and we’re out of here.